Global Business Environment: Analysis of SASOL's International Trade and Operations

This article provides an in-depth analysis of SASOL's international trade and operations in the global business environment. It covers the key components that impact international trade of SASOL along with its PESTLE analysis, strategic challenges faced by SASOL while running operations in international environment, and evaluation of globalisation influence on governance, leadership, cultural structure and operations of SASOL. It also evaluates the influences of ethical and sustainable globalisation on organisational functions using McKinsey's 7-S framework.

Global Business
Environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART 1............................................................................................................................................3
1. Analysing the key components like cost, market, environment and competition that impact
international trade of SASOL along with its PESTLE analysis..................................................3
2. Explanation of complexity of strategic challenges faced by SASOL while running
operations in international environment .....................................................................................5
3. Evaluation of globalisation influence on governance, leadership, cultural structure and
operations of SASOL..................................................................................................................6
PART 2............................................................................................................................................8
4. Evaluation of the influences of ethical and sustainable globalisation on organisational
functions......................................................................................................................................8
5. Analysis and evaluation of different ways for making decision that helps in working
effectively in global market......................................................................................................10
6. Articulate and determine the various routes to internationalisation an organisation may
adopt including key hurdles......................................................................................................11
Recommendations.....................................................................................................................11
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Globalisation is procedure through which local things belongs to a particular nation are
placed globally for their use in the global network of international business operations and
market. All the functions in this process runs in a very smooth and speedy manner. The business
activities such as retailing, marketing and other functions are scaled one in the global business.
International marketing and sustainable globalization are the main issues in global operating
process (Smoktal, Khamkhoeva and Zhilenko, 2021). So, international business in the energy
and chemical industry are analysed and evaluated with the application of appropriate tools and
techniques in the on a multinational company that is SASOL that is functioning their operations
in almost all the nation across the globe. SASOL is a global energy and chemical company that
has its headquarter in Cape Town, South Africa, it was founded in 1950 in Sasolburg. They
implement their expertise and knowledge for integrating new technologies and process in the
global scale operating facilities. They have their business activities such as production and
market a high range of quality products in over 23 nations that maintains value for all
stakeholders. Energy enterprise has will be positioned to global trends by producing new
solutions through pursuing greenhouse gases emissions reductions with the growth in renewable
energy and gas that also generates high profit.
PART 1
1. Analysing the key components like cost, market, environment and competition that impact
international trade of SASOL along with its PESTLE analysis
Globalisation of business functions for an organisation like SASOL requires a proper
analysis of key factors and realization of cost nature that incurred while shifting trade and
commerce internationally, environmental elements that influence services and competition in the
market for enabling companies to maximise their revenue and other benefits. Following is the
breakdown of these major components that are analysed on basis of SASOL's strategy:
 Cost: In domestic business, SASOL is not full get the benefit of economics of scale. The
goodwill and technological enhancements with the energy sector will cause to a reduced
service offering to their customers of the energy and chemical industry (Baskaran,
Chandran and Ng, 2019). The organisation would get the basic material for
manufacturing products at a low price than the domestic country that is not extended its

products beyond the boundaries of the nation. The reduction in the cost incentive will
lead to new expansion of SASOL in the global market.
 Market: International market is more consumer sufficient that domestic market. In the
market of origin country, higher sales of products can not be possible instead low level of
sales profit is generated because of low scale of sales units (D'yakonova, Nikitina and
Gurvits, 2018). Whereas, in international market, different strategies and customized
products can be offered to variety of customers due to availability of various groups of
consumers.
 Environment: Effects of environmental components have a great influence on the
expansion of operational activities by the company like SASOL. Numerous countries and
their regions of the key operational area of business in the world provide motivation to
SASOL for differentiating its products and services and offer according to the strategic
and environmental rules and policies.
 Competition: SASOL has to face very strong competition in international trade
operations of energy and chemical sector in comparison to domestic market. In
international scale, many market players are presented that have great resources along
with capabilities than SASOL.
PESTLE analysis of SASOL:
To measure organisation's position in the global market and environmental factors that
can impact operational activities, PESTLE analysis is the best tool. SASOL is more focused on
their products and services in order to ensure quality and security.
 Political: SASOL management must ensure that they fulfils the requirements of federal
government for smooth running of business (Dima, Dima and Mahagaonkar, 2018). The
company has great support from government of different countries because they follow
all regulations set by authorities of nations for ensuring safety of people.
 Economic: The revenue of SASOL is continuously increasing as company is providing
variable goods with concentration on quality, safety and sustainability in the products.
Initiation of these new factor in commodities also initiates capital earnings of every
particular matter for increasing net sales in each nation.
 Social: Any goods or services of business can not called as successful until and unless
the product is not manufactured by considering the living system of their consumers.

These social factors continuously alters SASOL regarding the time and mindset of
customers along with their lifestyles. SASOL is taking corrective measures to its
objective as customers as global level are in search of products that are safe to use and
sustainable.
 Technological: SASOL is a developing business, few tactical steps for them to take with
right time. As it is one of top international firm so with emerging shift in technological
elements company requires to purchase new products and technologies in order to face
competition in the market (Dunn, 2018). SASOL invest a specific amount on their
research and development to produce much safer products that do not harm people's
health.
 Legal: SASOL has to deal with various laws and regulations as the firm offers products
like fuels, gases, construction material, electronics and other products, government of
every country has their own legal restrictions and standards for manufacturing and selling
these kind of products.
 Environmental: SASOL regarding environmental effects dedicated their operations in
environmental friendly manner with preserving natural resources and energy.
2. Explanation of complexity of strategic challenges faced by SASOL while running operations
in international environment
Whenever an organisation like SASOL plans for expansion of their operations beyond
their geographical boundaries, then they have to undergo various strategic challenges that ranges
in monetary as well as non-monetary resources. Below are some complexities that SASOL faced
while shifting globally:
 Fees for entry in market: SASOL has the options to start their business operations
internationally through exchange of export fees and franchising to their domestic
business organisation (Holbeche, 2018). The enterprise can also go for global business by
building a new branch or subsidiary in the intended nation as wholly owned entity in
operational activities. The decision regarding the way of entry determines the pros and
cons with equilibrium of strategic plans of the SASOL.
 Legal structures of each nation: The multinational organisations has to undergo a lot of
domestic and global rules and regulations which determines the boundaries for the
attempts and practice business activities legally. SASOL face many challenges and issues

while raising their business in other countries as company operations in energy and
chemical industry and legal authorities of each country have high limitations for
production of these products, many a times it happens that many activities delays due to
licensing issue. Before moving beyond the boundary, SASOL has to first get legally
licence and patents for their manufacturing process.
 Cultural issues: Culture within organisational structure is always belong to the country
of origin as SASOL is founded in South Africa then its various cultures in workplace are
established according to the domestic nation not gregarious to foreign countries. But,
while operating business globally the cultural strategies requires to be local consumer
oriented in international business operations (Jabbour, Grebinevych and Pereira, 2020).
Cultural similarities are essential for better functioning of operations and generating
greater amount of profit internationally. Strategic management of SASOL must take
required measures for learning the respective culture of country in which they are
operating. Official and other individuals in SASOL must be trained about cultural
legacies of operating nation. That's the reason SASOL requires to take correct steps for
enriching local culture orientation.
 Tough management: Implications of international business will be perceived by the
business when there are other important managerial challenges such as supervision,
direction of face for facing orientation in international business enterprises like SASOL.
Easy management of workplace cannot be possible because of the distance between the
headquarter and other international branches of the SASOL. Auditing or inspection
manners are also becoming tough because of international operations of the chemical and
energy sector (Jha, 2019). The enterprise should take steps in order to improving their
managerial complexities.
3. Evaluation of globalisation influence on governance, leadership, cultural structure and
operations of SASOL
Apart from the external environmental components of business that are global operative
enterprises, internal components such as corporate governance, cultural structure, leadership and
operational behaviours of the international functions also have great influence on the SASOL.
That are described below:

Organisational governance: Earlier, corporate governance might not be essential when
a energy and chemical enterprise wants to expand its domestic area. The organisation must take
new governing rules and policies for the functions in the strategic and operation management.
All the tasks and functions of the global branch should be kept under the new policy regarding
the corporate governance. The SASOL governance structure is governed by their board of
directors and their duties by power of board, operations of board is committed towards high
standards that are set by corporate governance authorities (Khodjayev, 2021). Effective oversight
of this multinational company has a comprehensive range of responsibilities, systems as well as
policies in order to ensure the the SASOL is well managed with effective control and oversight.
Leadership: Workforce and workplace are to be trained properly for the compatibility of
the global chemical industry in which the customer and the partners as well are sophisticated
than the local customers. Leaders and the top level management should be more learned and
trained about the recent business environment and current trends of environment along with legal
systems of the nations in which they operate as well as domestic one. Superiors of the
subordinates and their role in management have such impacts of leadership on international scale
of activities that are crucial for surviving in energy and chemical industry. SASOL is led by the
smaller groups of committee's board members with delegate authority by the specific board
matters in the remittance of board members. Each standing member is chaired by a non-
executive members of board.
Cultural structure: New operative techniques attempts are essential for better managing
of cultural structure of the international branch of the global chemical and energy enterprise
SASOL. Every component of the multinational business would impact the whole functioning of
the business along with profit margin. That's the reason SASOL must have learning of cultural
aspects of every country and in different situations in which they operate (Luo, 2020). All of
these key elements have an effect on international business environment in context of challenges
and advantages that in another manner will managed by strategic advisor of SASOL while the
procedure of managing knowledge of project by the leadership governed committees control
board systems which intersect with integrated performance control during the stage of operation
execution and monitoring or controlling process.
Operational behaviour: The activities of global enterprises like SASOL is not same as
domestic ones. They are more focused towards culture and operations than the domestic firms.

The activities of global enterprises would be strategic concentrated for the enterprises such as
non functional firms. SASOL has different operations in their business management.
PART 2
4. Evaluation of the influences of ethical and sustainable globalisation on organisational
functions
McKinsey’s 7-S framework:
The fundamental premise of this model is that there are seven internal aspects of an
organisation that requires to be aligned if it is to be successful. The main benefits of this
McKinsey 7-S framework is that it provides support in the following:
1. Enhance the performance of enterprise.
2. Examine the effects that are likely influence future changes within an organisation.
3. Align the departments and processes while the merger is occur.
4. Determine the best implementation of strategy.
 Strategy: The strategy of this model is relates to the allocation of resources within
SASOL (Mandal and Sarathy, 2018). The aim of of SASOL is using the different tools in
effective and efficient manner. Introduction of new technology, product portfolio and
differentiation in services is the best path to succeed in market.
 Structure: This indicates to the organisational structure and SASOL has a traditional
hierarchy in their structure, that makes the process of decision making difficult.
Centralisation in the organisational structure, networking and matrix enables management
in taking right decisions.
 System: It is related with the financial systems, promotion, recruitment, performance
appraisal systems and information system as well. SASOL is running smoothly in the
present scenario of financial condition but promotion and information systems requires to
be taken into consideration while taking strategic decisions (Mohapatra, Madan and
Srivastava, 2020).
 Shared Value: It relates with mission and vision of organisation as well as their values.
SASOL follows stable value in the workplace but it has slight employees turnover that
might influence their strategic decision making of the organisation.

 Staff: The foremost factor for each organisation, it includes the current workforce in
organisation, their knowledge and strength along with experience. SASOL high turnover
for staff.
 Style: The style follows by the organisation is related to the culture of the organisation
and management styles in accomplishing their objectives and goals. SASOL have a
collective management style with centralized organisational structure (Pattnaik and
Sahoo, 2020). Their leadership style is supportive.
 Skills: The last part of 7-S model is skills that is ability of business. Usually, it involves
skills of superiors and subordinates and decision making skills. As per SASOL, the main
issue they face is lack of experience among their staff and skills related to making
promotion in the managers.
The HOFSTEDE model of culture:
One of the foremost concept of management that is introduced by Dr. HOFSTEDE. This
has six fundamental dimensions that an organisation must taken into consideration while
planning their operations. Every dimension represents the culture of enterprise and the influence
of external factors on organisational behaviour.
 Power distance index: According to the framework, a high power distance index score
shows that business have unequal, hierarchical distribution of power. And, a low PDI
score indicates the power is shared equally among the members. High PDI means
organisation is centralized, hierarchies are complex, there is large gap in compensation
and authority. Low PDI means organisation is flatter, superiors and subordinates are
almost equal.
 Individualism versus collectivism: High IDV reflects high value placed on people's
time and their requirements for privacy and freedom. An enjoyment of challenges and an
expectation of employees reward for their hard work (Raj, 2020). Low IDV indicates
emphasis on building skills and becoming master of every task, employees work for
intrinsic rewards, maintaining harmony among group members overrides other moral
issues.
 Masculinity versus feminity: This relates to the traits of different kinds of personalities.
High MAS indicates strong egos, feeling of pride and importance that are attributed to

status. Low MAS means relationship oriented and consensual, more focused on quality of
life.
 Uncertainty avoidance index: It is for describing the ability of individuals of coping
with their anxiety. High UAI indicates many social conventions, individuals are
expressive and are allowed to show their anger, emotions and a high energy in society.
Whereas, low UAI means openness for making change or innovation and generally
inclusive, open ended learning or decision making and less sense of urgency.
 Long versus short orientation: It refers to time horizon of individuals in the society.
Long term orientation indicates individuals are thrift, education are seen as positive
values and modesty among people (Suresh and Biswas, 2020). Short term orientation
means strong convictions as people tend to oversell themselves, values and rights are
emphasized.
 Indulgence versus restraint: It is related with nature of restraint and indulgence within
social groups. In a situation in whi9ch employees are indulgence that means they are
optimistic and restraint means they are pessimistic. High indulgence shows importance of
freedom of speech and focus on personal happiness. High restraint shows more controlled
and rigid behaviour among the individuals of organisation.
5. Analysis and evaluation of different ways for making decision that helps in working
effectively in global market
The global environment can be more sophisticates in comparison to domestic
environment. Decision making can be variant based on below mentioned factors:
 Logical thinking: IN the process of decision making in which enterprises can be better
for the best decision and the opinions of the participants may not be fruitful for the
greater interest of SASOL. There will be more scope for logical thinking of the decision
making process.
 Expert thinking: When the decision is not viable by the major and logical thinking that
the time for expert thinking that will determine the end decision (Suslyakova, Gorbunova
and Avdeeva, 2020). In global operations and promotion the tasks performed by the
employees are an expert decisive thought in the global decision making process for the
company like SASOL.

 Major decisions: It is the democratic way of making decision in which all enterprises
can take operative and strategic decisions on the basis of their major role in the decision
making process. The major opinion will get the due respect for their contribution of the
decision making effectiveness. So, the major role for the best decision is regarded best in
the decision making process.
6. Articulate and determine the various routes to internationalisation an organisation may adopt
including key hurdles
There are various routes of internationalisation that are discussed below:
 Transnational strategy: This strategy enables the company will focus more on the large
services that keeps the standard of the low cost structure. The face of the cross-culture
efficiencies will introduce more cultural diversity of the ways of globalisation of the
services of SASOL.
 International strategy: Through exporting and importing of products and services the
company will able to expand its operations in the international level. Licencing,
franchising and fee oriented mode of export and import service will be followed in this
strategy. Barriers are legal bindings and fees of the licensing and procedures of the legal
ways of licensing and exporting (Zhan, 2021).
 Multinational strategy: SASOL can extend its operations to the different countries with
same business model and same strategy of the functioning. There may be barriers such as
communicational issues and trust issues in the operational units of the companies while
maintaining of performance will be another barrier. The legislation law, country culture,
structure and governance, geographic distribution of facilities and resources,
infrastructure, information technology software, resources availability and employee
capability will be another hurdle on multinational strategy. The strategy of the
internationalisation of the services and goods will determine the scope of global business
operations of the SASOL.
 Global strategy: In the way of offering the services of the companies SASOL as per the
local preference and interest on the global scale. The strategy of globalisation will be
focused more on the economies of scale. The global standard products will be focused on
the strategy. Cultural differences and perceptions about the individuals and available
resources are the major barriers the strategy is facing.

Recommendations
After the analysis of business operations in global scale of SASOL, there are some
recommendations for the strategic operational management of the enterprise:
 SASOL must analyse the internal and external threats and opportunities before going to
global business operations.
 SASOL must grab the opportunities through the better usage of internal strength and
competencies though the weaknesses is the disheartening points for the business
operations.
 International operations of SASOL must be centralized wholly and in few essential areas
should be decentralized.
 Appropriate knowledge, skills, experience and information about the legal and political
environment should be acquired before going to respective countries for service business.

CONCLUSION
It can be concluded, that company not always expect that expansion in international
market brings growth and development especially for the businesses like SASOL. The
globalisation of business operations might occur with some unpredictable challenges and issues
in the global business environment. These challenges sometimes results in rendering negative
effects in all the operations in workplace nut can also bring better outcomes in specific
conditions. Although, globalisation is relatively a strategic decision, management of operations
would have a few ways of making choices in expansion scope. Management executives should
taken into consideration all the pros and risk that are involved in competing at global level along
with determining the likelihood that their entity will have some chances to succeed by examining
conditions of demand in global market, elements that can affect operations, supporting sectors,
structure, rival companies and foremost is strategy. When business made decision on expansion
overseas, then it must be based on whether its global strategy will be multi domestic,
transnational or international. When businesses like SASOL, a leading firm enters a new market
then management have options to choose the ways of managing their operations through
exporting, franchising, creating subsidiaries that can be wholly owned and joint venture.

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